PEOPLE STATE NEW YORK v. ASSOCIATION CONTRACTING PLUMBERS CITY NEW YORK (05/23/68)

SUPREME COURT OF NEW YORK, SPECIAL TERM, NEW YORK COUNTY
1968.NY.41796 <http://www.versuslaw.com>; 291 N.Y.S.2d 624; 57 Misc. 2d 256
May 23, 1968
THE PEOPLE OF THE STATE OF NEW YORK, PLAINTIFF,v.ASSOCIATION OF CONTRACTING PLUMBERS OF THE CITY OF NEW YORK, INC., ET AL, DEFENDANTS
Louis J. Lefkowitz, Attorney-General, (Samuel A. Hirshowitz and George C. Mantzoros of counsel), for plaintiff.
Sullivan & Cromwell (David W. Peck, David M. Potts and Abraham Wilson of counsel), and Kadel, Wilson & Potts for Association of Contracting Plumbers of City of New York, Inc., and others, defendants.
Max E. Greenberg for Samuel Meyerson and another, defendants.
Nathaniel T. Helman, J.
Author: Helman

They are motions made before answer by defendants for judgment pursuant to CPLR 3211 (subd. [c]). The Attorney-General cross-moves for like relief.

The Attorney-General brings this action for an injunction and penalties against the Association of Contracting Plumbers of the City of New York (Association) and certain of its officials and members to enforce and secure antitrust compliance under the Donnelly Act (General Business Law, §§ 340, 342, 342-a). The Attorney-General charges that defendants and their Association in a combination have entered into contracts, agreements and arrangements whereby "[competition] or the free exercise of any activity in the conduct of any business trade or commerce or in the furnishing of any service in this state is or may be restrained." That these alleged illegal contractual arrangements are evidenced in the defendants' Association's by-laws, resolution and labor agreement; to wit: (1) to boycott the State University Construction Fund (SUCF) contracts let by single contracts for all the work to be performed and to force owners to let contracts by separate contracts, so as to eliminate competition by negotiations for lower prices between owners; (2) to eliminate negotiations for lower prices and to tamper with pricing practices between owners, general contractors, and plumbing contractors; (3) to prohibit advertisements in publications except those of organizations in which the Association holds membership; (4) to prohibit use or installation of plumbing materials, fixtures or articles not first purchased by members from the manufacturer or dealer and by him sold to the owner or contractor.

Plaintiff has withdrawn without prejudice its challenge to the Association's by-laws enumerated in article IV, paragraph 5; and article V, paragraphs 1, 2, 3. Specifically the Attorney-General charges that defendants and their Association's action and decision that "plumbing contractors * * * should not partcipate in any arrangement that does not provide for such separate bid and separate contract" is an illegal agreement, arrangement and combination to boycott, to coerce the SUCF to comply with their demands and let contracts by separate contracts, in violation of the Donnelly Act. On June 19, 1962, it was reported at a membership meeting of the Association that "many questions as to whether or not association members could refrain from submitting bids on a job known as The Downstate Medical Center, recently advertised by the aforementioned (New York State University) construction fund under a single contract" had been considered. The following action was then adopted by majority vote of the members of the defendant Association.

"The principle embodied in separate bidding, separate contracts provision of the law is in our view a sound and equitable one; the efforts made to break down that rule are not in our interests or for the public benefit. A recent amendment permits a state agency to ignore separate bidding, separate contract, in its discretion.

"In our opinion, plumbing contractors should insist on separate bidding and separate contracts and should not participate in any arrangement that does not provide for such separate bid and separate contract."

The minutes of the June 19 meeting were read and affirmed at the regular membership meeting on September 18, 1962.

The trustees of SUCF were given the discretionary power in contracting for State University construction to specify the use of single rather than separate contracts (Education Law, §§ 370-384). They designated the Downstate Medical Center as the first project on which the work would be contracted and bid on a single contract basis. It is this action which seemingly triggered the meeting of June 19, 1962, at which proposals were adopted, claimed by the Attorney-General as illegal actions. The Attorney-General points out that some of the members "reasoned that they did not feel the Association should be on record as refusing to bid on any job." Furthermore, it was then decided that "plumbing contractors * * * should not participate." It is thus argued that a group boycott to refrain from bidding involving each participant's surrender of economic benefits and profits was established, necessarily contemplating mutual assurances of co-operation.

Defendants state that such action was with respect to a public issue to which they were constitutionally entitled to assemble and speak, and that the Attorney-General has given a strained and sinister meaning thereto without any such intention; that there were no concealed refusals to bid under single contracts and no boycott of single-contract projects. The Association believed that the single-contract provision in the State Education Law is contrary both to public policy expressed in basic law and to the public good. That they expressed in an opinion, which they claim is all the resolution amounted to, as to the policy which plumbing contractors should pursue in reference to this public matter. Under the head of advocacy, the Association claims its right to petition the Legislature, to influence public agencies to adhere to the separate-contract system and to recommend that contractors insist on separate bidding. The question must come down to whether the action of the defendants was, in fact, an agreement to refrain from participating in public work on any other basis.

Thus, plaintiff states that there was a boycott initiated and carried out by the defendants against general contractors because of the position taken by the defendant trade association in adopting the resolution on June 19, 1962 and other activities by defendants. Defendants deny any such intention and allege facts disputing the alleged boycott. The acts of defendants must be considered in the light of all the surrounding circumstances so as to determine the true meaning to be attributed to defendants' conduct. The alleged conspiracy must be judged by viewing it in its entirety and not by dismembering and viewing its separate parts.

The court will not infer and presume facts which it is the burden of plaintiff to demonstrate with such clarity as would justify a directed verdict.

Whether there was actionable conduct within the ambit of the Donnelly Act is a matter for trial. Another of the Association's by-laws, which the Attorney-General complains of herein, pertains to advertising. It reads: "No member shall advertise in programs, engineers' or architects' handbooks, nor in publications of societies, churches or church fairs, nor in kindred publications except programs or publications of organizations in which this association holds membership; and no member shall advertise in conjunction with or participate in any advertisement of a building by its owner or operator."

Defendants contend that it is limited in scope and for the protection of the members of the Association. That it is a manner of protecting the membership from an imposition they wish to be free of, or to give them an "out" when approached for such advertising. That it was adopted because subcontractors were constantly being besieged by builders, general contractors, unions and others to attach their names to advertisements and to pay a portion of the advertising costs. Contractors were being asked to take pages ...

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